1 What are the total costs of each production department after the support department costs of information technology and human resources have been allocated using (a) the direct method, (b) the step-down method , and (c) the reciprocal method?

2.What are the total costs of each production department after the support department costs of information technology and human resources have been allocated using (a) the direct method, (b) the step-down method (b), and (c) the reciprocal method? Assume that all of the work of the IT department could be outsourced to an independent company for $155 per hour. If Shanshan no longer operated its own IT department, 25% of the fixed costs of the IT department could be eliminated. (1) Should Shanshan outsource its IT services? (2) If yes, calculate the saving amount; if not, please calculate at least how much the amount of outsourcing must be reduced before the company considers outsourcing.

Shanshan, Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes. The company has two product lines (clothing and shoes), which are produced in separate manufacturing facilities; however, both manufacturing facilities share the same support services for information technology and human resources. The following shows total costs for each manufacturing facility and for each support department. The total costs of the support departments are allocated to the production departments using a single rate based on the following: Information technology: Number of IT labor-hours worked by department Human resources: Number of employees supported by department Data on the bases, by department, are given as follows